Trading position (short-term; our opinion): Short positions (with a stop-loss order at $54.21 and initial downside target at $42) are justified from the risk/reward perspective.

On Tuesday, crude oil extended losses as concerns over global glut of crude and refined products continued to weigh on investors’ sentiment. As a result, light crude lost 0.49% and closed the day below $43. Will we see further deterioration in the coming days?

Today’s alert is going to be quite short, because crude oil didn’t do anything that would change the outlook yesterday and the same applies to today’s session so far. On Tuesday, the commodity moved slightly higher after the market’s open and approached the previously-broken lower border of the black declining trend channel. Despite this small increase oil bears took control very quickly and light crude reversed. Such daily reversal is a bearish sign, but the outlook was bearish anyway, so nothing really changed – especially when we take into account the fact that crude oil extended losses in the following hours, hitting an intraday low of $42.36. Although the commodity rebounded slightly later, it closed the day under $43 for the first time since Apr 25. Taking all the above, we believe that the comments that we made yesterday remain up-to-date also today and if you haven’t had the chance to read our Tuesday’s alert, we encourage you to do so today – it’s up-to-date.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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